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The state of the coconut industry is better understood if we look at the web of its history. What started as a colonial crop forced on the natives by gubernatorial edict in 1642, coconut began to be an important commercial agricultural crop by the turn of the 20th century. Here are some historical milestones:

  • Since 1840, coconut products in the Philippines were traded in small quantities with Chinese/Malay traders. Coconut fibers and coconut oil were likewise used by the Spaniards in rigging the Galleon and as food for sailors plying the Manila-Acapulco Galleon trade.

  • In 1898, with the increasing demand for soap and the invention of margarine, copra and coconut oil were exported to Europe as raw material ingredient of said products. Margarine was also a cheaper substitute for butter. By then, copra export comprised 5% of the total commodity export of the Philippines.

  • The US market came in after the transfer of the Philippines from Spain. By 1926, more than 90% of US demand for desiccated coconut was supplied by the Philippines.

  • The earliest account disclosed that in 1905, Philippines had only 210,000 hectares of cocal area with 42 million coconut trees.

  • US preferential treatment for coconut export and the duty-free entry of coconut in Europe encouraged further growth of the coconut industry. By 1935, some US$221.22 million was invested in land and improvements in coconut plantations, coconut oil milling, refining and product processing. About this period, there were six big coconut oil mills, with 46.5% American capitalization, 29% British, 11.8% Chinese, 7.6% Filipino and 4.6% Spanish (Guerrero. Sylvia, 1985).

  • Early in 1930, the US imposed a US$ 0.03 per pound processing tax and an additional US$0.02 excise tax on all copra and coconut oil imported to the US. The excise tax collected from Philippine coconut products were returned to the Philippines Commonwealth treasury on condition that it shall not be used to develop or subsidize the production of copra, coconut oil and other allied coconut products.

  • During the Presidency of Manuel L. Quezon, an average of P21 million per month of coconut excise money was remitted and provided a large source of the annual national budget. It was spent to build roads in Mindanao, to acquire lands for home lots, assistance in agrarian reform, agriculture, public health, public works and promotion of Philippine commerce and trade. After World War II, some P80 million more was used for post war rehabilitation. The refund ended after Philippines gained independence in 1946 (Guerrero).

  • During and after World War II the US continued to buy more copra and coconut oil to extract glycerin needed in the production of explosives. Various fractions of oleo chemicals were also derived for the manufacture of cosmetics, pharmaceuticals, emulsifiers, propellants, paints, and insecticides.

  • The heightened demand for copra and coconut oil established the foundation of the coconut manufacturing and export economy as it stood by during the early golden years of industrialization in the Philippines.

  • By 1960, the area planted to coconuts expanded to 1.60 million hectares, increasing to 2.283 million or 42% in 1975. Copra production doubled from 1.60 MMT to 2.216 MMT.

  • In the same period, coconut export increased by 39.56% from 1.34 MMT to 1.86 MMT boasting hefty export revenue of US$ 483.80 million, increasing by 79% from US$ 270 million.

  • The '70s and the next decade that followed marked a new era of development with the imposition of the coconut stabilization levy to harness the inflationary effect brought by the high prices of copra and coconut oil in the world market. The levy was utilized to finance several development programs like coconut replanting, fertilization, scholarship program for deserving children of coconut farmers, acquisition and rationalization of coconut oil mills for the benefit of the coconut farmers, research and development, establishment of a coconut farmers' bank and investments.
  • The stabilization levy ended & indefinitely suspended in 1982.